Category Archives: Overview/General

… More than a decade later, the Port of Miami Tunnel is the marquee example of a public-private transportation infrastructure partnership. … But the tunnel’s success is deceptive, since the unique factors that converged in South Florida cannot be replicated everywhere. For every Port of Miami Tunnel, scores of ill-conceived projects dot the American landscape. The United States lags behind not only in basic maintenance of existing assets at the end of their life cycles but in building the next generation of roads, bridges, rail, tunnels, and aviation projects. With public funds scarce in a climate of tax-cutting and budgetary austerity, the risk is that the contactor/partner pays the up-front costs but sticks future generations of taxpayers and rate-payers with exorbitant charges. … But states and municipalities can learn to appreciate the differences between partnerships that put the public first and the rip-offs that erode public confidence in government and drain public coffers.

… The Trump administration’s version of an infrastructure initiative relies heavily on private financing, which may or may not materialize. … But the Trump framework is only an exaggeration of recent trends. At best, new fiscal pressures can lead public officials to get creative, seeking private partners who may bring superior engineering, financing, and legal expertise, and better attention to maintenance and operations. But private-sector involvement does not automatically mean a better outcome. Citizens and public officials often forget that the private sector’s prime motive is profit, not philanthropy. If a firm cannot clear a good return on an investment, either the deal will not materialize or the terms will be onerous to the public. Public debates can be marred by false expectations, and confusion or obfuscation of what distinguishes a good partnership from a rip-off. …

Privatization has many names. This guide cuts through the language that privatization promoters hide behind, to show what’s really at stake for our public services. It also lists some of the key privatization pushers, as well as the processes that governments and employers use to pave the way for privatization. …

The privatization of the pubic sector has been one of the defining policies of the world economy since the 1970s. State-owned utilities and monopolies have been sold off or transferred to the private sector on the neoliberal theory that “the market” is more rational and better able to manage such enterprises. Under the Pinochet dictatorship, Chile set the stage, moving towards privatizing the state in the 1970s. Under Thatcher, the U.K. began privatizing in the 1980s. The Spanish scholar Germà Bel addresses where the idea of privatization comes from. Neoliberalism, predicated on a primacy of the market, is the overarching ideology of privatization. …

Americans who travel abroad sometimes wonder why many of our airports are lacking in comparison to the best international airports. Or they want to know why other nations seem to do a better job with public transportation and the management of other public assets, from ports to parks. The answers we are tempted to give are that we do not invest as heavily in public infrastructure as many other nations and that a market-oriented American ethos with an entrepreneurial culture prefers private solutions (cars versus trains) to public ones. … But there’s another answer: Compared to many other nations, in the United States government has more direct control of public assets such as airports, convention centers, and transport, water and sewer systems (just to name a few). And the government does not, for the most part, manage them well, failing to leverage the market potential and value of the assets they own. Far from being broke, many cities and counties have enormous untapped wealth, which could be used to finance not only infrastructure but investments in children and other critical needs. …

There is a better way, teased out in detail and with great authority in The Public Wealth of Cities, a new book co-authored by Dag Detter and Stefan Folster, two Swedish experts in public finance. The pair have studied public asset management and are promoting a third alternative to political management or full privatization—public ownership that relies on professional, private-sector management.… The authors’ core argument is a disruptive idea in public policy that links management systems, public asset value, intelligent financing, and the proper role of politicians in a democracy. …

… As vague as Trump’s pronouncements have been on the matter, it is clear that the general thrust behind the promised building-and-repair push involves using federal dollars as up-front investment to entice private enterprises to provide most of the financing. While Democrats announced their opposition, the general idea of increased privatization of infrastructure has had a bipartisan cast. President Obama supported a plan to create an “infrastructure bank” that would help finance so-called public-private partnerships (known, for their alliteration, as P3s), but that idea fizzled under the glare of Republican opposition. He also floated the idea of selling off the Tennessee Valley Authority. …

Today, I read two articles centered on this idea, both of which concerned Vice President Mike Pence – and one that concerned Pence’s role in the aftermath of Hurricane Katrina. One article also included a sprinkling of US secretary of [privatized] education, Betsy DeVos. A major goal of corporate education reform is to deliver public education to private entities (corporations, or even nonprofits, but don’t think that an entity termed “nonprofit” cannot be a handsome money dispenser for those running the nonprofit and doling out contracts). However, the extreme-right-Republican aim does not end with public education but with delivering the operation of the entire American infrastructure to private entities. In the end, what this entails is having private corporations front money to state and local governments in order to lease back to the public what the public already owns.

… Now President Trump is poised to continue privatization and private contracting in all kinds of industries, from education to incarceration. Here & Now’s Jeremy Hobson looks at the history and politics of privatization with Donald Cohen and Shahrzad Habibi of the group In The Public Interest. …

A contractors group has welcomed a bipartisan House bill placed in the hopper last month aimed at curbing agency use of lowest price technically acceptable contracts. The Promoting Value Based Procurement Act (H.R. 3019), introduced by Reps. Mark Meadows, R-N.C., and Don Beyer, D-Va., would amend the Federal Acquisition Regulation to require civilian agencies to align themselves with the Defense Department and stiffen their rationales for resorting to lowest price technically acceptable contracts, which have grown in use in recent years but are controversial. …

From the press release:
Increased reliance by government customers on the Lowest Price Technically Acceptable (LPTA) acquisition strategy poses unnecessary risks such as budget overruns, delivery delays and, in the worst cases, mission failure. According to a new report by TASC, Inc., the LPTA process can be appropriate for commoditized services with clearly defined requirements, but not for complex services that support sophisticated, high-risk missions. In cases where the government does elect to use the LPTA process, it should rigorously define and evaluate technical acceptability and past performance to avoid compromising the performance of the program or system and, ultimately, the success of the mission….

…The TASC report makes the case that using the LPTA approach in the acquisition of complex mission services can compromise mission success and increase total program costs over time when factoring in rework and related costs. To achieve the best value, TASC recommends that solicitations for complex services adopt a classic best-value, cost-technical tradeoff approach that considers innovation, scheduling rigor and program cost containment. When the government does use the LPTA process, technical and past performance requirements should be defined precisely. In addition, applying detailed technical criteria using scenario-based evaluations, high standards of past performance and price-realism analyses are essential to mitigate the risk of unsuccessful performance on a given contract solicited on an LPTA basis. The TASC report offers examples of solicitations that utilize these recommendations….

Abstract: Various studies have analyzed the relationship between fiscal stress and contracting out, but have failed to achieve conclusive results. In this article, we take a broad view of fiscal stress, addressed in terms of financial condition and studied over a lengthy period (2000-2010). The relationship between fiscal stress and contracting out is studied using a dynamic model, based on survival analysis, a methodology that enables us to take into account the effect of time on this relationship. As this study period includes the years of the Great Recession (2008-2010), we also highlight the impact of this event on the fiscal stress–contracting out relation. The results obtained suggest that taking into account the passage of time and conducting a long-term assessment of financial condition enable a more precise understanding of this relation. We also find that the Great Recession reduced the probability of local governments’ contracting out public services.

Rebecca Kolins Givan, an Associate Professor of Labor Studies and Employment Relations at Rutgers University, explains the thinking behind the push for privatization. Privatizing profit and socializing risk. Finance and making money off of public health services. The Post Office and rural mail delivery. How workers can organize in the face of cost cutting and privatization and the possibility for organizing in spite of the assault on the public sector and the distinct types of union organizing.

In this episode, Chris Mitchell, the director of our Community Broadband Networks initiative, interviews David Morris, a co-founder of the Institute for Local Self-Reliance and the director of the Public Good initiative. The two discuss the climate surrounding privatization in our economy and how the incoming Trump administration will bolster these efforts nationwide. Morris delves deep into the history of public infrastructure including explanations of how our language around the subject has changed over the years, privatization in other countries, and hope for the future.

[Ed. Note: A full transcript of the audio is also available from the source.]

Throughout BC, CUPE members have been key players in the effort to keep services public or bring them back in-house. Our members have led effective campaigns to ensure that residents are getting cost-effective, transparent and reliable services. This compilation of stories, first published in CUPE BC’s Public Employee magazine, highlights some recent contracting-in success stories.

Privatization is one of the hottest topics in state and local government. Google the word and you come up with around 12 million entries. But for all the articles and academic reports on the best approaches to outsourcing government services, there’s also a surprising amount of activity around insourcing. These days, roughly the same percentage of services that are newly being contracted out are being brought back into the government fold, according to Mildred Warner, a professor of city and regional planning at Cornell University. Her examination of data accumulated by the International City/County Management Association (ICMA) for the period from 2007 to 2012 showed that new outsourcing accounted for 11.1 percent of all services and new insourcing accounted for 10.4 percent of all services. … According to Warner’s analysis of ICMA data, the two main reasons governments reverse their privatized services are inferior service quality and a lack of anticipated cost savings. Additionally, improvements in the capacity of local governments to work with greater efficiency can make them the more appealing alternative. …

Back In House: Why Local Governments Are Bringing Services Home, a new report from the Columbia Institute, is about the emerging trend of remunicipalization. Services that were once outsourced are finding their way back home. Most often, they are coming home because in-house services cost less. The bottom-line premise of cost savings through outsourcing is not proving to be as advertised. Other reasons for insourcing include better quality control, flexibility, efficiency in operations, problems with contractors, increased staff capacity, better staff morale, and better support for vulnerable citizens. When services are brought back in house, local governments re-establish community control of public service delivery. The report examines the Canadian environment for local governments, shares 15 Canadian case studies about returning services, follows-up and reports back on two earlier studies promoting contracted out services, provides a scan of international findings, and shares some best practices and governance checkpoints for bringing services back in house. Many of the local governments examined employ CUPE members. As part of our ongoing work to promote the value of publicly-delivered services, CUPE helped fund the production of the Columbia Institute report Back in House